Will new ‘no fault’ divorce legislation affect financial settlements?

The Divorce, Dissolution and Separation Act 2020 comes into effect on 6 April 2022.

Arguably, the new legislation represents the most significant change in divorce law since 1969.

The new rules introduce a new ‘no-fault’ basis for obtaining a divorce and removes the five current grounds required to launch a petition. Instead, the new legislation allows a single party to begin divorce proceedings without the permission of their spouse if they believe the marriage has irretrievably broken down.

The new rules provide a 26-week cooling off period between the start of divorce proceedings and the final divorce order being made. However, some divorces may take longer because of procedural issues and court delays.

While most of the legal profession support this move, as it is intended to reduce animosity and conflict, there are concerns that extreme forms of unreasonable behaviour may not be considered as part of a claim for an improved financial settlement.

This is an issue which will, no doubt, be tested in the family courts in the months and years ahead.

Regardless of the change in the law, forensic accountants will continue to play a key role in helping legal teams advise on available assets in order to achieve an equitable settlement.

At Moore Thompson, we have a number of experts who are experienced in providing specialist valuation and tax advice for couples who are separating and who wish to ensure that the division of assets is as tax efficient as possible.

Our experts are also able to provide robust reports and act as expert witnesses in court proceedings on issues including divorce, particularly where substantial assets are involved.

Alongside business valuations, we can advise on whether and how funds can be extracted from the business and assist with financial settlement negotiations, including splitting pensions, share transactions, setting up trusts and investing funds.

We can assist also with completing Form E, which discloses the individual’s income and assets, and examine the other party’s form.

Additionally, we are able to provide advice on the tax implications of disposing of matrimonial assets. For more information on our forensic and expert witness services, please contact Ken Maggs on 01775 711333.